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11,000 UPS Freight drivers could be on strike by Monday

Business Insider logo Business Insider 11/8/2018 Rachel Premack

UPS Freight is clearing all of its shipments this week to ensure its network is completely empty by Friday. That's because its 11,000 drivers, who are represented by the Teamsters Union, could be on strike by Monday.

"The company has now begun discussions with UPS Freight customers to inform them of the potential for service disruption and the need to arrange alternative carriers," UPS said in a statement emailed to Business Insider.

UPS Freight and the Teamsters Freight National Bargaining Committee have reached a standstill on contract negotiations. Every five years, the two parties negotiate on a labor contract to apply to UPS Freight's drivers.

Starting on November 7, Teamsters members across the country are voting on UPS' "last, best, and final offer" contract, a Teamsters spokesperson told Business Insider. The votes will be tallied on Sunday.

If a majority does not approve of the contract, UPS Freight drivers won't work on Monday. It would be the first UPS strike since 1997, when 185,000 employees held a 16-day walkout.

The drivers' negotiating committee is demanding restrictions on subcontracting, higher wage increases, better pay for drivers who perform dock work, an elimination of certain requirements for pension and vacation benefits, and other protections, according to a statement that Teamsters sent Business Insider.

UPS has added certain provisions. For instance, workers need to have worked 1,500 hours in a year to qualify for a year of pension credit. Previously, they needed 1,800 hours to qualify.

Still, the negotiating committee said in a statement that it's not enough. Members already approved of a strike, which they called "a last resort."

Meanwhile, a UPS spokesperson said in the emailed statement that the company feels the contract is fair and highly competitive. 

"It is an offer that rewards our employees with wages and benefits at the top of the industry and compensates them for their contributions to the success of the company," UPS said in thestatement. "We are disappointed that the Freight Teamsters union leaders have chosen to announce the potential for a strike, should their members vote 'no' on the offer."

The strike would likely jack up the prices of your holiday shipments

The increase in transportation costs in 2018 has delayed shipments and jacked up the final price of goods.

A shutdown from UPS Freight would exacerbate that. Shippers who typically rely on the service would have to quickly find a last-minute alternative - which would likely be more expensive.

According to industry publication FreightWaves, should the strike occur, on-time performance by shippers may fall by 5% to 10%. And small- to mid-sized businesses could see price increases by 10% to 20%. This year, we've seen the increase in shipping costs be passed down to consumers from companies like Amazon and General Mills.

UPS Freight comprises the company's less-than-truckload (LTL) sector, where multiple shippers share a truck space to ship packages. It generated $2.6 billion in revenue last year and moved 2.8 billion pounds of goods in the last quarter, FreightWaves reported.

UPS Freight differs from the small package unit that consumers most typically interact with. The 250,000 UPS drivers are covered by an already-negotiated labor contract, so UPS said "customers can remain confident" that service will remain normal. 

Related video: Technology is the fuel for our transformation, UPS CEO says (provided by CNBC)

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